Income Tax benefits for Senior Citizen

By | June 10, 2016

Income Tax benefits for Senior Citizen

Income Tax benefits for Senior Citizen

What is the meaning of senior citizen under Income tax Act  ?

Age Criteria and Condition for senior citizen

  • Must be of the age of 60 years or above but less than 80 year at any time during the respective year.
  • Must be resident

Illustration

(1) Mr. Kumar (resident in India) attained the age of 60 years during the financial year 2016-17. Will he qualify as senior citizen under the Income-tax Law for the financial year 2016-17?

Yes, since Mr. Kumar is a resident and he attained the age of 60 years during the year 2016-17, he will be treated as senior citizen under the Income-tax Law for the financial year 2016-17.

(2) Mr. Kamal (non-resident) attained the age of 60 years during the financial year 2016-17. Will he qualify as senior citizen under the Income-tax Law for the financial year 2016-17?

Mr. Kamal is a non-resident, the benefits of senior citizen under the Income-tax Law are available to a resident only, and hence, Mr. Kamal will not be treated as senior citizen under the Income-tax Law for the financial year 2016-17.

What is the meaning of Very senior citizen under Income tax Act  ?

Age Criteria and Condition for senior citizen

  • Must be of the age of 80 years or above at any time during the respective year.
  • Must be resident

Illustration

(1) Mr. Raja (resident in India) attained the age of 80 years during the financial year 2016-17. Will he qualify as very senior citizen under the Income-tax Law for the financial year 2016-17?

Yes, since Mr. Raja is a resident and he attained the age of 80 years during the year 2016-17, he will be treated as a very senior citizen under the Income-tax Law for the financial year 2016-17.

(2) Mr.Rajat (non-resident in India) attained the age of 80 years during the financial year 2016-17. Will he qualify as very senior citizen under the Income-tax Law for the financial year 2016-17?

Mr.Rajat is a non-resident, the benefits of very senior citizen under the Income-tax Law are available to a resident only and, hence, Mr.Rajat will not be treated as very senior citizen under the Income-tax Law for the financial year 2016-17

What are the Income Tax benefits for Senior Citizens ?

​​Senior citizens and a very senior citizen are granted a higher exemption limit as compared to normal tax payers. Exemption limit is the quantum of income up to which a person is not liable to pay tax. The exemption limit granted to senior citizen and very senior citizen for the financial year 2016-17  is as follows :

Income Tax benefits for Senior citizen

  1. Slab Rate : A senior citizen is granted a higher exemption limit compared to non-senior citizens. The exemption limit for the financial year 2016-17 available to a resident senior citizen is Rs. 3,00,000. In other words, a resident senior citizen is not liable to pay any tax up to income of Rs. 3,00,000. The exemption limit for non-senior citizen is Rs. 2,50,000. Thus, it can be observed that an additional benefit of Rs. 50,000 in the form of higher exemption limit is available to a resident senior citizen as compared to normal tax payers.
  2. Deduction in respect of Medical Health Insurance Premium :As per section 80D, an individual  or HUF can claim deduction upto Rs 30000 in respect of Medical Health Insurance Premium incurred on the health of a senior citizen person.
  3. Deduction in respect of medical treatment of Specified Disease :Deduction under section 80DDB can be claimed by an individual or  HUF, who is resident in India in respect of amount actually paid by the taxpayer on medical treatment of specified disease or ailment as prescribed under rule 11DD (SEE Note Below) .Expenditure incurred on medical treatment of a senior citizenunder Section 80DDB is limited to Actual sum incurred or Rs 60000 whichever is less.The assessee is required to obtains the prescription for such medical treatment from a neurologist, an oncologist, a urologist, a haematologist, an immunologist or such other specialist, as may be prescribed
  4. Exemption from Payment of Advance Tax :-​​​As per section 208, every person whose estimated tax liability for the year is Rs. 10,000 or more, shall pay his tax in advance, in the form of “advance tax”. However, section 208 gives relief from payment of advance tax to a senior citizen. As per section 208​ a resident senior citizen (i.e., an individual of the age of 60 years or above during the relevant financial year) not having any income from business or profession, is not liable to pay advance tax.

Income Tax benefits for Very senior citizen

  1. Higher Slab Rate : A very senior citizen is granted a higher exemption limit compared to others. The exemption limit for the financial year 2016-17 available to a resident very senior citizen is Rs. 5,00,000. In other words, a resident very senior citizen is not liable to pay any tax up to income of Rs. 5,00,000. The exemption limit for non-senior citizen is Rs. 2,50,000. Thus, it can be observed that an additional benefit of Rs. 2,50,000 in the form of higher exemption limit is available to a resident very senior citizen as compared to normal tax payers.
  2. Deduction in respect of Medical Health Insurance Premium :As per section 80D, an individual  or HUF can claim deduction upto Rs 30000 in respect of Medical Health Insurance Premium incurred on the health of a Very senior citizen person.
  3. Deduction in respect of Medical expenditure :As per section 80D, an individual  or HUF can claim deduction upto Rs 30000 in respect of Medical expenditure incurred on the health of a very senior citizen person provided that no amount has been paid to effect or to keep in force an insurance on the health of such person. ( Note the Total/ Aggregate Deduction in respect of Medical Expenditure and Medical Health Insurance Premium in respect of Senior Citizen can not exceed Rs 30000)
  4. Deduction in respect of medical treatment of Specified Disease :Deduction under section 80DDB can be claimed by an individual or  HUF, who is resident in India in respect of amount actually paid by the taxpayer on medical treatment of specified disease or ailment as prescribed under rule 11DD (SEE Note Below) .Expenditure incurred on medical treatment of a Very senior citizen under Section 80DDB is limited to Actual sum incurred or Rs 80000 whichever is less.The assessee is required to obtains the prescription for such medical treatment from a neurologist, an oncologist, a urologist, a haematologist, an immunologist or such other specialist, as may be prescribed
  5. ​​Exemption from E filing of Income tax return :- From the assessment year 2015-16 onwards any taxpayer filing return of income in Form ITR 1/2/2A and having a refund claim in the return or having total income of more than Rs. 5,00,000 is required to furnish the return of income electronically with or without digital signature or by using electronic verification code. However, Income-tax Law grants relaxation from e-filing in above case to very senior citizen.

    In other words, a very senior citizen filing his return of income in Form ITR 1/2/2A and having total income of more than Rs. 5,00,000 or having a refund claim can file his return of income in paper mode, i.e., for him e filing of ITR 1/2/2A (as the case may be) is not mandatory. However, he may go for e-filing if he wishes

  6. Exemption from Payment of Advance Tax :-​​​As per section 208, every person whose estimated tax liability for the year is Rs. 10,000 or more, shall pay his tax in advance, in the form of “advance tax”. However, section 208 gives relief from payment of advance tax to a senior citizen. As per section 208​ a resident senior citizen (i.e., an individual of the age of 60 years or above during the relevant financial year) not having any income from business or profession, is not liable to pay advance tax.

Whether income tax benefits are available for non resident senior citizen ?

The tax benefits offered under the Income-tax Act are to a senior citizen/very senior citizen are available only to resident senior citizen and resident very senior citizens. In other words, these benefits are not available to a non-resident  senior citizen/very senior citizen.


Note : Rule 11DD

11DD (1) For the purposes of section 80DDB, the following shall be the eligible diseases or ailments :

(i)           Neurological Diseases where the disability level has been certified to be of 40% and above,—

(a)          Dementia ;

(b)          Dystonia Musculorum Deformans ;

(c)          Motor Neuron Disease ;

(d)          Ataxia ;

(e)          Chorea ;

(f)           Hemiballismus ;

(g)          Aphasia ;

(h)          Parkinsons Disease ;

(ii)          Malignant Cancers ;

(iii)         Full Blown Acquired Immuno-Deficiency Syndrome (AIDS) ;

(iv)         Chronic Renal failure ;

(v)          Hematological disorders :

(i)           Hemophilia ;

(ii)          Thalassaemia.

 (2) The prescription in respect of the diseases or ailments specified in sub-rule (1) shall be issued by the following specialists:—

(a)          for diseases or ailments mentioned in clause (i) of sub-rule (1) – a Neurologist having a Doctorate of Medicine (D.M.) degree in Neurology or any equivalent degree, which is recognised by the Medical Council of India;

(b)          for diseases or ailments mentioned in clause (ii) of sub-rule (1) – an Oncologist having a Doctorate of Medicine (D.M.) degree in Oncology or any equivalent degree which is recognised by the Medical Council of India;

(c)          for diseases or ailments mentioned in clause (iii) of sub-rule (1) – any specialist having a post-graduate degree in General or Internal Medicine, or any equivalent degree which is recognised by the Medical Council of India;

(d)          for diseases or ailments mentioned in clause (iv) of sub-rule (1) – a Nephrologist having a Doctorate of Medicine (D.M.) degree in Nehprology or a Urologist having a Master of Chirurgiae (M.Ch.) degree in Urology or any equivalent degree, which is recognised by the Medical Council of India;

(e)          for diseases or ailments mentioned in clause (v) of sub-rule (1) – a specialist having a Doctorate of Medicine (D.M.) degree in Hematology or any equivalent degree, which is recognised by the Medical Council of India :

Provided that where in respect of any diseases or ailments specified in sub-rule (1), the patient is receiving the treatment in a Government hospital, the prescription may be issued by any specialist working full-time in that hospital and having a post-graduate degree in General or Internal Medicine or any equivalent degree, which is recognised by the Medical Council of India.

(3) The prescription referred to in sub-rule (2) shall contain the name and age of the patient, name of the disease or ailment along with the name, address, registration number and the qualification of the specialist issuing the prescription:

Provided that where the patient is receiving the treatment in a Government hospital, such prescription shall also contain the name and address of the Government hospital.

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